U.S. retail sales drop further severely in April, consumer activity to remain weak for several months
U.S. retail sales fell 16.4 percent sequentially in April, almost double the fall recorded in March. Today’s data is below market expectations of a fall of 12 percent. March’s contraction was reported to be slightly smaller than reported originally, with sales falling 8.3 percent as compared with 8.7 percent recorded earlier.
In relatively more volatile categories, sales came in soft, impacted by store closures and lower prices. Especially, sales at motor vehicles & parts dealers fell 12.4 percent and sales at gas stations dropped 29 percent. Food services and drinking places also recorded their double-digit falls for the second straight month, with sales dropping by almost 30 percent on the month, and down almost 50 percent relative to one year ago. Building materials & garden equipment performed comparatively better, dropping just 3.5 percent.
Sales in control group, which excludes the four volatile categories mentioned above, dropped 15.3 percent. This was significantly softer than market expectations for a fall of 4.6 percent. Online retailers were the only ones recording increased sales in April, rising 8.4 percent. Meanwhile, other remaining categories recorded double-digit falls. Clothing, electronic & appliance stores, and home furniture stores saw the worst hit, with sales dropping 79 percent, 61 percent and 59 percent, respectively.
Grocery and health & personal care stores recorded lower sales in April, falling 13 percent and 15 percent, respectively. Nevertheless, those falls come after stockpiling in March, where sales at grocery stores rose sharply by 28.6 percent. Sales at grocery stores rose 13.2 percent year-on-year.
“The unprecedented toll that social distancing, lockdowns, and travel restrictions took on consumer spending was on full display in April. Discounting and lower prices for gasoline also likely weighed on nominal sales. With social distancing and travel restriction measures expected to remain in place for some time, it will likely take months for consumer activity to return to somewhat normal levels. There could also be a permanently shift to online shopping for some goods, increasing the risk that many brick-and-mortar retailers may permanently close, which will reshape the landscape for commercial real estate”, said TD Economics in a research report.